Before you apply for an IVA, it is essential that you have the right amount of available equity in your property. This amount is calculated by taking the current value of your home, discounting it by 85% and subtracting any existing mortgages and secured borrowing. This amount should be less than PS5,000. If your available equity is greater than this amount, you will need to re-mortgage your property. You must be aware that any additional borrowing you take out must not exceed 50% of your IVA contribution. This is because it could make you bankrupt and lose your home.
Before applying for an IVA, it is important to consider all your other debt options and determine what will work best for you. Debt charities can advise you on the best way to manage your debts. One such option is to apply for a debt relief order, which freezes debt repayments for a fixed period of time. If your financial situation does not improve within this timeframe, then your debt may be written off.
Your insolvency practitioner will review your financial situation and work out how much you can afford to repay each month. He or she will also look at your assets and savings. The latter will help you to plan your repayments. The practitioner will then contact your creditors and agree on an amount with them. Generally, repayments will take five years to complete.
Once the plan is approved, you can choose to pay a lump sum to your creditors or increase your monthly payments if your financial situation improves. However, you should note that an IVA will affect your credit score. If your credit score is damaged as a result of an IVA, the results will remain on your credit file for six years.
When applying for an IVA, it is important to gather as much documentation as possible. The more documentation you provide, the more likely your case will be accepted. Moreover, be honest and accurate when filling out your application form. Any false information you provide will only harm the process. If your monthly payments are not calculated accurately, you may end up paying more than you need to.
Once your application has been approved by the IP, your creditors will receive a copy. They will then have some time to consider it and vote whether or not they approve it. If 75% of them vote yes, the IVA will be confirmed. In some cases, creditors will haggle over the terms of your IVA, including whether they can borrow more money, include your assets or even extend your repayment time period.
Applying for an Individual Voluntary Arrangement (IVA) is a good option for many people who are struggling with their debt. The process involves a professional Insolvency Practitioner who sets up an individual repayment plan and divides the money among your creditors. The repayment plan can lead to a debt discharge after five years.